Vodafone and O2 to merge assets

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News article

Vodafone and O2 to merge assets into joint venture company

June 2012

telecom mast

Following the lead of the other major telecom operators recently, Vodafone and O2 announce their intentions to merge their network assets into a separate 50/50 joint venture company. 

This will be created through the consolidation of O2 and Vodafone’s existing network infrastructure consisting of 18,500 masts, which will be either transferred to the joint venture or decommissioned over time.  The move will see the two companies decommission duplicate sites and as a result there will also be a 10% overall reduction in the total number of sites in the UK operated by the two companies. 
 
For landlords with telecoms masts, this could be another destabilising factor in an already fragile market place which has seen in recent years the strategic sharing alliance between T-Mobile and H3G and the wholesale merger of Orange and T-Mobile leading to a reduction in the number of telecom masts deployed around the UK.  In turn this has led to a perceived downward pressure on the rents landlords can achieve. 
 
However, landlords should not be disheartened by the latest moves by Vodafone and O2.  With the government’s anticipated regulatory requirement of network coverage to 98% of the population by 2017 and the expected auction of 4G spectrum bandwidth later this year, it is highly likely that in future years we will see a reversal of fortunes for landlords with a likely increased uptake in demand for new sites across the UK, leading in turn to an upward drive in rents. 
 
Finally, it is by no means a ‘done deal’ that O2 and Vodafone will be permitted by Ofcom to merge their network assets into a separate company.  The two companies are currently in discussions with Ofcom and this raises the spectre of competition issues. Fisher German on behalf of landlords throughout the UK will be making representations to Ofcom on these competition issues and the likely effects on landlords if this merger is allowed to proceed.
 
For further information or advice on any telecoms matters, contact Christopher Hicks on 01858 411202 email chris.hicks@fishergerman.co.uk
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